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plane graphs of rwaac , rE , and rd Suppose company ABC will be worth either 180 M or 100 M depending on whether the

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Suppose company ABC will be worth either 180 M or 100 M depending on whether the economy is strong or weak in one year. Both states of the economy are equally likely. The current risk-free rate is 5% and the cost of equity if the company is 100% equity financed is 12%. Assume perfect world. On the debt-to-value-ratio (as X) and Expected rate of return (as Y) plane draw graphs of two ce and ra. Be specific, indicate on the graph all important / pivotal points / values. You may use Excel and include your spreadsheet or draw your graph on the grid paper and include scan of your graph. Suppose company ABC will be worth either 180 M or 100 M depending on whether the economy is strong or weak in one year. Both states of the economy are equally likely. The current risk-free rate is 5% and the cost of equity if the company is 100% equity financed is 12%. Assume perfect world. On the debt-to-value-ratio (as X) and Expected rate of return (as Y) plane draw graphs of two ce and ra. Be specific, indicate on the graph all important / pivotal points / values. You may use Excel and include your spreadsheet or draw your graph on the grid paper and include scan of your graph

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